Glossary

Customer Health Score 

The way companies manage their current customers is crucial for growing their business. As 54% of consumers say that they now have higher expectations for customer service than they did a year ago, it’s never been a more important retention strategy.

It costs around 6-7 times more to acquire a new customer than it does to retain one, so paying closer attention to how your existing customers are feeling can help you save a lot of money in the long run. What you need is a system that can tell you which customers require attention, and when. This is where a customer health score comes in.

What is a Customer Health Score?  

A customer health score combines a number of factors, such as how often customers use your product, how much of it they use, the number and cost of licenses, to create a customer health ‘score’. This score is designed to be an indicator of how likely each customer is to renew, leave, or grow their account with you.

A customer health score, or client health score, is often used by customer success teams as a means of tracking customers’ sentiments more accurately. This means they can better concentrate their efforts on the accounts that need the most attention.

Why is a Customer Health Score so Important?

A customer health score helps to determine which customers require attention, which are happy, and which are on the way out. This helps your customer success team work out where to focus resources. In the past, these teams have wasted time on unsalvageable accounts.

Quietly dissatisfied accounts can also fly under the radar, then when renewal time comes around, they leave. Having a regularly updated metric that gives an accurate depiction of the customer’s happiness can help create a more considered and targeted approach to customer success.

How is a Customer Health Score Created?  

There are a number of different ways to calculate a client health score, depending on your product and the market your customers exist in. Here are some commonly used factors to consider when building a client health score.

  • Product engagement – How often customers use the product and for how long
  • Depth and breadth of usage – How much of the product they use, and how many users they have
  • Upsells – How often customers have upgraded or added new products to their package
  • Customer support tickets – If they have any open tickets and how many issues they have raised over the course of the lifespan in total
  • Survey results – If they participate in surveys, how do they respond?
  • Engagement with CS team – Do they keep in touch with your customer success team?

There may even be more specialized factors that you want to add to your customer health score formula, specific to your product.

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